“You’re definitely seeing the impact of the currency headwinds in the first quarter results, and also the European economies have slowed relative to last year,” said Will Hamlyn, investment analyst at Manulife Asset Management.

The euro has been on a steady rising path since mid 2017, reaching a more than three-year high against the dollar in February and capping gains for European stock markets.

While that was seen as a sign of health of Europe’s economic recovery and signaled growing foreign investor appetite for the region’s equities, it curbed the value of overseas earnings and hurt competitiveness.

Deutsche Bank estimates that every rise in the euro reduces European earnings growth by five percent.

Exporting heavyweights Daimler (DAIGn.DE), Renault (RENA.PA), Continental (CONG.DE) and Sanofi (SASY.PA) have all reported last month hits to their results from the strong euro.

In April however the single currency has fallen rapidly to a four-month low against the dollar, with the greenback buoyed by the U.S. Treasury yields topping three percent and expectations the Federal Reserve will further raise interest rates.

That in turn helped euro zone stocks rise 4.4 percent in April, outperforming Wall Street for the second straight month, and shrug off slower earnings growth and weeks of disappointing data that signaled slowing economic growth.

“For the moment we’ve seen the headwind peak and that may stabilize this quarter,” said Pierre Bose, head of European Strategy, International Wealth Management at Credit Suisse.

“We’ve already seen a very significant amount of the euro’s appreciation take effect on earnings so at this point in time what matters most is just how much more hawkish people become on the ECB,” he added.

Bose however said markets appeared to underestimate the speed at which the European Central Bank would tighten policy, saying the euro would eventually strengthen again.

German companies listed in the broad HDAX .GDAXHI index, whose U.S. dollar sales exposure is estimated by DZ Bank at 28 percent of total turnover, also rose 4 percent last month. The U.S benchmark S&P 500 .SPX instead gained just 0.3 percent.

In a note this week, Deutsche Bank strategists said they would lift their 2018 European earnings growth forecast to seven percent from 4.5 percent should the euro fade back to end-2017 levels.

Manulife’s Hamlyn agreed that a further fall in the euro could be welcome news for European companies, although the initial impact of the April decline was likely to be limited.

“It needs to come back down to 1.15 really to create relief for a lot of these companies,” he said. The last time the euro traded at that level against the dollar was in July 2017.

On Thursday the euro rose off four-month lows as the dollar’s recent rally came to a halt after the U.S. Federal Reserve did little to alter market expectations for further interest rate rises this year.

Even though the euro remained more than four percent below the peak hit in February, that dampened investor appetite for European stocks on Thursday, highlighting how sensitive shares in the continent are to currency swings.

But for Gerhard Schwarz, Head of Equity & Cross Asset Strategy at Baader Bank in Munich, the currency outlook for corporate Europe looked favorable, even though overall earnings growth was set to slow compared to 2017 due the slowing economic growth.

“There is a good chance the euro would weaken again,” he said, saying the currency could reach $1.12-1.15 during the second half of the year, likely bolstering corporate earnings, although any lift could be delayed by hedging policies.

“The euro has certainly has been profiting from expectations the ECB will tighten policy following the Fed’s path but this, I think, will be subdued and take place much later that consensus expects,” he added.

Reporting by Danilo Masoni; additional reporting by Helen Reid and Kit Rees in London; Editing by William Maclean and Kevin Liffey